Enda Kenny (Mayo, Fine Gael)
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I am pleased to have this opportunity to brief the House ahead of the next meeting of the European Council in Brussels. As the House is aware, this was to have taken place next Monday. However, on Monday President Van Rompuy announced that he would convene the meeting of the European Council and that of the Heads of State or Government of the euro area a week later than originally planned. This is to allow time to finalise a comprehensive strategy for the euro area. In a number of key areas, the extra time will mean that we have a more complete picture available to us when we meet to take the necessary decisions.

The report of the troika mission to Greece will assist us in deciding what further elements may be necessary to address the situation there. This will have a read across to what may be necessary in terms of bank recapitalisations and how we should achieve them. ECOFIN will have time to have a further meeting, which has now been convened by the Polish Presidency, and the euro group will also meet.

When President Van Rompuy contacted me on Monday to alert me to the change, I told him that I did not have any difficulty with his suggestion if it was his assessment, as President, that further time was needed to get things right. In such a case, we should take that time and use it to best effect. I also said to him that it was important that all member states be involved in the discussions as we prepare for the European Council.

As the House will be aware, meetings of the European Council have, in recent times, been dominated by efforts to address the immediate challenges that we face. By necessity, our work has been driven by crisis resolution and the needs of the immediate situation. As a result, we are now better equipped than in the past to deal with problems when they arise. I am sure the House will agree, however, that it is essential that leaders take the time to take a longer term perspective to ensure that Europe has the right policies in place to generate growth and job creation and to deliver greater economic stability in the future.

Next week's meeting will be important in that regard. When we meet, we will discuss economic policy, including growth enhancing measures, economic governance and the external aspects of our economic policies. We will also prepare the Union position for the meeting of the G20, which will take place in Cannes in early November. Finally, we will finalise an EU position ahead of the Durban conference on climate change.

It is, of course, entirely appropriate that economic issues should be the focus of our meeting. The challenges facing Europe are being felt around the world, including in the US and emerging economies. While it is vitally important that member states, including Ireland, continue their efforts towards consolidation and structural reform, we must also intensify our efforts to secure sustainable and job creating growth. This requires determined joint action. I expect that our discussion will work towards identification of a number of priority areas for fast-tracked action. I hope that these will be as specific as possible and that we will identify those measures most likely to have a significant impact on growth and jobs. The Commission in particular has been giving careful study to this matter.

The Single Market, as Deputies are aware, is one of the Union's greatest strengths. As an exporting country, it is of immense value to Ireland. Despite decades of work, however, it remains incomplete. In April of this year, the Commission brought forward what it called a Single Market Act designed to fill in some of those gaps. In doing so, it identified twelve levers that it believed could have real impact on our current situation. These include measures that will have real resonance here, such as access to funding for small and medium-sized enterprises, SMEs, and creating the right regulatory environment to allow business to thrive. They also include measures that can help exporters looking to develop markets in other member states, including measures to boost consumer protection in a way that helps to build confidence in cross-border transactions, modernising the framework for public procurement, and plans for the digital single market, including the facilitation of e-commerce and cross-border use of online services, which are growing in importance on a daily basis. All efforts should now be made to drive this work forward with real purpose.

Energy and innovation are also areas with enormous potential to contribute to growth. In February of this year, the European Council offered suggestions on how work should be advanced. Although I do not expect a discussion of substance at next week's meeting, I do expect that we will agree to revisit our commitment to take stock of progress in December and March of next year, respectively. In this regard, a priority should be given to putting in place an EU-wide venture capital scheme.

This work must be accompanied by a genuine commitment by all member states to creating stable and sustainable economies across the Union. As the House is only too well aware, Ireland's economic choices are in large part determined by the strictures of our programme with the EU and IMF. However, through the Europe 2020 process and under stability and growth rules, non-programme member states have also submitted national reform programmes and have had these scrutinised under a process of peer review. These plans were collectively assessed by the European Council in June, when we endorsed country-specific recommendations proposed by the Commission.

There is an urgent need for action at European Union level, but we should not lose sight of the fact that much decision making in the area remains at national level. Our economies are highly interdependent and our fates hang closely together. To restore international confidence in Europe's economy, we need to ensure that commitments entered into at EU level are acted on swiftly and comprehensively by each member state. It is, therefore, vitally important that the recommendations made in June are now fully reflected in national decisions on budgetary policy and structural reforms.

There are other interesting possibilities on the table for the meeting of the European Council, including a temporary increase in co-financing rates for EU funds, accompanied by a prioritisation of projects focusing on growth, competitiveness and employment. It is also proposed that the European Investment Bank be asked to examine the possibilities for further contributing to boosting investment in Europe, including through optimal use of Structural Funds in countries facing particular difficulties, the leveraging of EU budget resources, and the facilitation of access to finance for small and medium enterprises. I welcome these proposals and hope there will be agreement to take them forward as a matter of urgency.

The European Council will also consider the external aspects of the Union's economic policy. Europe needs to ensure it is in a position to promote and defend its interests in the wider world. There are things we can do to contribute to our growth potential, both in the short and longer terms. As an exporting country, Ireland has a very strong interest in this debate.

While concluding the Doha round must remain a priority, a realistic assessment must conclude that agreement is not on the immediate horizon. Therefore, we need to attach renewed priority to bilateral and regional agreements, particularly with strategic partners and those whose markets are expanding at significant pace. This work should focus on lowering trade barriers, opening market access and ensuring the appropriate environment for investment and the protection of intellectual property. Public procurement is also an area of key importance.

As the House will be aware, after protracted discussions difficulties between the Council and the Parliament on the technical details of the six legislative measures to strengthen economic governance in the Union have recently been resolved, and the legislation is now being finalised. I welcome this. It will allow a much higher degree of surveillance and co-ordination, contributing towards sustainable public finances and greater economic stability throughout the Union.

In addition, we are moving towards completion of the first Europe 2020 cycle. We have adopted the euro plus pact, to which the European Council will return in December. Taken together, this is a significant and tangible policy response to the crisis Europe is facing. Unfortunately, it is too often dismissed or underestimated by those who may not appreciate the extent of what has been achieved, or the speed with which it has been put in place. Of course, there is always scope for more to be done.

We need to see the changes to the EFSF, introducing greater flexibility, take effect. As the House is aware, Ireland completed its process of adoption in good time prior to the end of last month. Ratification and entry into force of what has been agreed will put important new possibilities in place, including enabling the EFSF to intervene in secondary markets, to undertake precautionary lending, and to contribute to bank recapitalisation through loans to governments in non-programme countries.

In July, the Heads of State or Government of the euro area countries asked President Van Rompuy, in consultation with the Presidents of the Commission and the euro group, to come forward with specific proposals on how to improve working methods and enhance management in the euro area. Following bilateral consultation with all interested parties, I expect President Van Rompuy to report to the meeting of euro area heads following the meeting of the European Council.

Although President Van Rompuy has yet to make his proposals known, I expect they will focus on what can and should be done in the short term and what is for more medium to long term action. I also expect he will seek to balance the need for tighter co-ordination and discipline among countries in the euro area with greater commitment to mutual support. It will take fine judgment on his part to come up with balanced and acceptable proposals.

As the House will be aware, Chancellor Merkel and President Sarkozy, following their meeting at the weekend, have also stated they will come forward with proposals, some of which may require treaty change. Again, we do not yet know what they ha ve in mind and I await their suggestions with interest. However, I will make two observations. Any suggested treaty change, even if only intended to enhance the operation of the euro area, is a matter for the 27 EU member states, not just the 17 that are currently part of the euro area. We are all a part of the Union, and I would not like to see a situation evolve where there are two categories of membership. The second is that, as I have already made very clear, while I am open to giving any suggestions serious and detailed study, treaty change is not something that should be approached lightly.

We have taken a great many steps to ensure greater co-ordination in the euro area, some of which are only now beginning to take effect. We need to give them a chance to work, to take stock, and to see what further steps need to be taken. We need to explore what is already possible under the existing treaties, pushing right up to their limits if need be. The question we must ask ourselves is what measures need to be put in place. Only then should we consider how to do so.

There are a number of other items on the agenda for next week's meeting of the European Council which are worth mentioning here. The Council will discuss preparations for the G20 meeting in Cannes on 3 and 4 November, and will confirm policy positions for the Union. The Union wants to see the G20, which is meeting under its French Presidency, send a strong growth-oriented message aimed at restoring global economic confidence. We are looking to see an outcome that is concrete, with targeted specific actions, to respond to the serious challenge of the global economic downturn. Of course, in recent months Europe has been in the news in this regard. It is also an occasion to place the European response to the related problems of sovereign debt and difficulties in the banking sector in a global context. This alone marks out the meeting as an important occasion in the calendar ahead.

In addition to placing growth at the top of the agenda, the Union seeks continuing reform of the international monetary system; a strengthening of regulation of markets and financial services; measures to counter the excessive volatility of commodity prices; and to deliver global recovery and sustainable growth. The European Council will also prepare the Union's position ahead of the conference on climate change that will take place in Durban from 28 November to 9 December.

The House will also be interested to know that tomorrow morning, ahead of the meeting of the European Council, I will meet the President of the Commission, Mr. Barroso, in Brussels. I will convey to him our support in two vitally important areas. The first of these is that we need the community method, which is the traditional way of doing business in the Union, to remain our touchstone for the future. It gives the Commission a key role as the guarantor of the treaties and the initiator of policy proposals. This is not an academic point. It is a matter of real importance for a small member state like Ireland. We do not want to see a Union where the largest member states dominate the agenda by dint of their size or economic importance. That is not a balanced or durable arrangement. As I pointed out, when the Heads of Government meet we sit as equals and not as leaders of countries with larger or smaller populations. We need a Union where the equality of all member states is fully respected, in reality as well as on paper.

The second message will be my strong and determined support for the Commission's efforts to focus energies on jobs and growth. In this, the Commission's agenda is Ireland's agenda, and I will commit our personnel to working hand-in-hand with his.

I hope the EFSF issue will be sorted out in Slovakia later this week as reports indicate.

The issues I have outlined are important ones for us as we approach the important meetings that will take place in Brussels, and I look forward to briefing the House again and having a discussion after I return when the meeting concludes, as is now the norm.

Micheál Martin (Cork South Central, Fianna Fail)
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This delayed summit marks the last chance for Europe's leaders to tackle the enormous and growing crisis which is facing the eurozone. Europe needs them to agree a dramatic package of supports and the revision of failed policies. The alternative is damage to the economic and political fabric of the Union which may take decades to undo. An unforgivable amount of time has been wasted by leaders seeking easy ways out or clever ways of appeasing national sentiment. The process of halting and half-hearted actions has managed to escalate the crisis. It is more than two months since it became clear that existing deals are inadequate and that the Greek situation could engulf Europe. The contagion which forced Ireland and Portugal out of the bond market has not been contained and confidence has not been recovered. Larger and more systemically important economies are now on the edge with rising concern about bank capitalisation adding an extra layer of instability.

There has been a succession of regular and emergency summits which issued claims to have drawn a line under the crisis. Each summit has been followed by the crisis becoming worse. Today, even Jean-Claude Trichet, the high priest of orthodox financial policy, is warning that Europe is on the edge of disaster. There is one overwhelming message before this summit, which is to act decisively or be prepared for the consequences. There is no room remaining for delay.

As the crisis has escalated so too have the measures required to defeat it. Europe needs the summit to deliver on a series of specific agreements. It must allow Greece to reduce its sovereign debts to a sustainable level; provide for the recapitalisation of banks in order to take account of these and other debt write-downs; ensure that the funds available are large enough to tackle all current and potential needs; commit to the reform of Euro governance which tackles the actual causes of the crisis; and end the destructive limiting of negotiations to a couple of the larger countries and begin to involve all member states.

The failure of Europe's leaders to have an inclusive and active dialogue is at the heart of the escalation of the crisis in recent months. Detailed discussions between France and Germany has always been a valuable part of achieving progress on big European issues. These two countries have often had conflicting policies but bilateral negotiations are essential in helping the functioning of the institutions of the Union. However, this co-operation has never been so exclusive of other countries and never before has it included issues which affect so many countries in such a profound way. No major reform of the Union has ever been achieved in this manner. It should be realised that European ideals cannot be reinforced by acting against them.

Since the beginning of the year there has been intensive contact between different countries in an effort to find a way forward. In February, the key principles were agreed, these being, debt sustainability, sound bank capitalisation, larger and more flexible funding and improved co-ordination. For reasons which are still unclear, the March 11 summit confirmed these principles but delayed their implementation. There were many fine statements about a resolve to act decisively but in reality there was little or no decisive action. The Ministers for Finance signally failed to finalise arrangements while market pressures were allowed to grow again.

The Heads and State and Government, who should have been holding an intensive series of meetings, stepped back and had few direct contacts. The Taoiseach's policy of non-intervention is more inexplicable today than ever. Seven months since taking up office, he has still not met a eurozone leader away from the margins of a major summit. In April he announced that he would lead a major diplomatic offensive but none has followed. In advance of the July summit he neither met nor telephoned any other leader. Having told the Dáil that he had not tabled proposals for the summit, he emerged from it claiming to have skilfully delivered an interest rate cut four times the level of what his Government had been asking for. Once again, spin rather than substance was the priority. The attempt to claim credit for actions taken has trumped the more difficult work of trying to shape events. The last time the Taoiseach had more than a snatched conversation with his good friend, Chancellor Merkel, was when he flew to Berlin for an electoral photo opportunity. Given that he has abandoned most of his policies from that time, the Chancellor is clearly in need of an update.

As the issues have become more serious, the leaders of Europe appear to be spending less time directly engaging with each other. Franco-German co-operation is welcome but it alone will solve nothing. The failure to consult others in a meaningful way makes it more difficult for governments in countries such as Slovakia and Finland to persuade parliaments and citizens to show solidarity with other countries. The Prime Minister of Slovakia has been left to sell a deal to Parliament in the face of a perception that this deal is being imposed on Slovakia. Given that there is no sense of the country having been involved properly in discussions, even pro-European Union parties feel free to attack it.

The Taoiseach's meeting with President Barroso is no substitute for an effort by him to promote Ireland's policies directly to other Heads of State and Government. Given that President Barroso has not been at either Franco-German summit, he is in no position to negotiate about its outcome. The Taoiseach should use this summit to insist on a return to the communitaire approach among leaders. If they do not get back to working together there can be no successful outcome.

The first item for agreement at the summit must be the substantial restructuring of Greek debt. The scale and pace of the budgetary adjustment being implemented by the Greek Government is enormous. There have been problems but yesterday's agreement with the EU and IMF confirms that Greece is moving forward with necessary adjustments. Greece's particular difficulties are being made significantly tougher because of the constraints of eurozone membership. The lack of the options of devaluation or unilateral restructuring puts a major limit on its ability to come out of the crisis. The attitude that everything is the fault of the Greeks shows an ignorance of the facts. Europe is Greece's problem just as Greece is Europe's problem. Helping Greece is a proper recognition of the duties of a currency union which freely admitted Greece as a member.

The contagion argument is bogus if restructuring is done at the same time as providing a credible firewall for others. The markets have traded for some time on the assumption of a partial default. A large section of the bondholders made purchases at rates which had default priced in. On a more fundamental level, the market can see when a debt is unsustainable. Denying the inevitable merely increases its likely impact.

Dara Murphy (Cork North Central, Fine Gael)
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Denying the inevitable like Fianna Fáil.

Micheál Martin (Cork South Central, Fianna Fail)
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It will be a bad outcome if the summit finishes without a comprehensive and generous plan for Greek debt.

The summit must also provide a mechanism for recapitalising many more banks in recognition of both the Greek position and the fact that reserves need to be higher on an ongoing basis. German, French, Italian and Spanish banks are under pressure, as well as those in smaller economies. This reinforces the idea that financial regulation is a trans-European issue and not one which can be brushed aside as a problem for the periphery. It is a mark of this Government's abandonment of its pre-election policies that "Labour's Way" and "Not a Red Cent" were followed by the complete adoption of the restructuring proposals being prepared by its predecessor. Indeed, it has even gone so far as to try to claim to have developed these proposals. This is merely another irrelevant political game but what is highly relevant is that the recapitalisation policy is showing the potential to work and is helping to restore confidence, albeit slowly.

As the Government knows but chooses to ignore, agreement to burn many bondholders was sought last year but this was rejected by the key funders. Unilateral action was not and is not an option. The argument we were faced with last November was the risk of contagion which could be a European equivalent of the collapse of Lehman Brothers. The collapsed of Lehman's happened at a time when there was no planning for recapitalisation and no decent information about the exposures of different banks. If Greek sovereign debt is restructured and if banks have reserves which meet rigorous stress tests then this contagion fear is no longer valid. The Taoiseach must insist at the summit that the proposal to restructure Irish bank debt should now be agreed.

For the bank and sovereign bailouts to restore confidence, they must be backed up by a dramatically larger fund. Half measures have not worked. Only when markets know there is sufficient funding available to support larger countries will they feel more secure in lending to them. If this requires the leaders to have a direct conflict with the ECB about leveraging already agreed funding, then so be it.

These measures relating to Greek debt, recapitalisation and adequate funding are what is required to deal with the crisis in hand. They will address the lack of confidence and will provide certainty that the members of the eurozone have taken actions which are proportionate to the crisis in hand.

It appears the summit will also be presented with proposals concerning the reform of governance within the eurozone to include not only increased co-ordination but also a substantial increase in central fiscal powers. This has nothing to do with tackling the crisis at hand and threatens to distract the Union, wasting time in interminable and possibly futile discussions. On top of this, many of the proposals do nothing to address the core weaknesses of the currency union which have been exposed over the last three years. They owe more to a pre-crisis agenda than one which has critically engaged with the evidence of what has gone wrong.

This crisis is not one which would have been prevented by greater co-ordination of fiscal policies. Throughout the decade before the recession, the European Council, Commission and Central Bank produced report after report about the fundamental strengths of the Irish economy and regularly praised our fiscal policy. In 2007, a detailed research report on Ireland by the OECD predicted medium-term growth of 5% per annum. Increased co-ordination will be based on the same expertise; it is no panacea.

Those who care to look back can see that it was Germany and France in 2004 who led the way in breaking agreed deficit limits and who brushed aside criticisms of their actions. The idea that this is a crisis caused by a wild periphery which ignored the advice of the restrained centre is superficial nonsense. The Stability and Growth Pact has comprehensively failed and an agenda which is based mainly on ways of strengthening its enforcement will also fail. For example, there has been no consideration of the absurd provision that the punishment for a country getting into budget trouble should be to make those troubles worse through fines. The example of the currency union of the United States is instructive, in that the Federal Government has never had some of the controlling powers being proposed for the eurozone.

One glaring omission from the debate has been the need for a radical reform of the working of the ECB. It is a young institution which is as arrogant as it is powerful. It has made an enormous number of bad policy decisions over the past few years. It has followed the most inflexible and orthodox policies of any major central bank, inflicting substantial pressures on countries and citizens in the process. If one wants to see a bank out of touch with reality all one needs to do is to read a speech given to the London School of Economics by Jean-Claude Trichet in June. At length, he praised the ECB's work in the past decade, admitting no error whatsoever in any policy area. He bizarrely talked about achieving a "precision landing" for European inflation and he justified being the last central bank in the world to keep raising interest rates after the recession had started. He followed this with a defence of raising them again this year, just as the recession took another turn for the worse. Four months later he is warning the leaders of Europe that the financial system is on the edge of a precipice.

The ECB's mandate must change. Employment levels must be included in addition to inflation. In changes which do not necessarily require treaty amendments, the ECB needs to be given increased powers to oversee national financial regulation. A hawkish approach to bank capitalisation and risk management is far more relevant to addressing the causes of the current crisis than a hawkish approach to inflation.

The debate about reforms should first start with a proper consideration of the many factors which led to today's crisis. Simply saying, "Let's have a fiscal union" is not a policy and is certainly not an answer. There is much which can be done within the existing treaties, in particular on financial regulation. There are also significant administrative changes which would help, including a greater diversity of advice and oversight from within the institutions. Any attempt to rush structural decisions will take a long-term issue and use it make to the short-term crisis worse. Let us deal with the issues in hand and not complicate them.

The silence of the Government on most of these issues has been striking. There has been no detailed statement of the Government's policy. Are we supporting Greek debt restructuring? Are we demanding that bank bondholders be burnt? What institutional changes are we supporting? Have we tabled any policies for discussion? The Taoiseach and the Tánaiste have delivered a few comments on the side of media events, but there has been little else. I note today's contribution was strongly nuanced to try to move the Taoiseach away somewhat from those comments, but as yet we have not heard any substantive statement on the issues Chancellor Merkel and President Sarkozy have put on the table following their summit.

Enda Kenny (Mayo, Fine Gael)
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We do not know what issues are on the table.

Micheál Martin (Cork South Central, Fianna Fail)
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Equally, the Taoiseach and Tánaiste have not initiated a round of contacts with eurozone colleagues. One meeting with the Commission President is not an adequate preparation for such an important Council summit. This summit may well be Europe's last chance. There is a desperate need for decisive action and real leadership. It has been missing for most of this year. The crisis has been allowed to become an emergency. Time has now run out and this summit meeting has in its hands the future of the euro and the hope of many millions throughout the Union.

Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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I wish to share time with Deputy Brian Stanley.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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That is agreed.

Pádraig Mac Lochlainn (Donegal North East, Sinn Fein)
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There is a financial crisis in Europe, one that is fast becoming a political farce. The spectacle of yet another Franco-German summit in recent days sends a clear message to the world about the current status of the European Union as a so-called partnership of equal sovereign states. Ireland's citizens have been forced to accept punishing austerity budget after budget over recent years. Along with the citizens of Greece and Portugal, we have been forced to bail out the banking system in the core, powerful European countries and have this labelled something else to the rest of the world.

Our elected political leaders are reduced to playing the bold child who must sit on the stairs until their disappointed parents are satisfied that they have learned their lesson. That is the level of influence this Government now has on EU policy. We were once in a lead role, but were reduced to the chorus line. It would now appear that we walked off the stage and now sit in the audience. We are spectators to the decision-making of others. This Government has allowed the partnership of equals that was Europe to be reduced to the sole ownership of Germany and France.

Last weekend, we were told of a Franco-German summit that would resolve the European crisis. Were we invited? Were our views sought? Was the Government consulted? By the end of the weekend, we were told that a deal had been reached that would resolve the crisis. Were our views sought? Was the Government consulted? We were then told that the summit was postponed and that no deal had been reached. Were our views sought? Was the Government consulted? A two-handed farce and we are the audience. We are now told that President Barroso has a plan, will unveil it today and will tell the Taoiseach tomorrow. Were our views sought and was the Government consulted by Barroso? A two-handed farce and now a one-man show. It would be funny if the stakes were not so high.

The economic and political world is looking in, wondering what is going on. What line will the EU agree to for the G20? Will it be the French way, the German way or President Barroso's way? We know for sure that it will not be Eamon Gilmore's and Labour's way. This lack of clarity at a European-wide level is matched only by the confusion within this Government. We have had the Taoiseach say "No" to treaty change, the Tánaiste claiming rather sheepishly that there is no need for a referendum but that the issues could be dealt with under the existing treaty and yesterday, the Minister of State, Deputy Creighton, opened the possibility of treaty change. While this circus is ongoing, we have unemployment continuing at 14.4%. Almost half of those on the live register have been unemployed for a year or more. We have 80,000 young people on the live register and at least 40,000 of our people are expected to emigrate this year.

I say to the Taoiseach that another way is possible. It is about putting the needs of our people before the needs of the bankers. A number of key steps must be taken at European and national level if we are to have any hope of delivering social and economic recovery. First of all, we need honesty, a word not used lightly in the banking world. We must honestly assess the level of banking undercapitalisation. The EU stress tests are not robust or honest, as demonstrated as one banking crisis follows another. On the basis of the most recent round of crisis meetings in Brussels and Frankfurt, it is clear that the critics of the European Banking Authority were right and that the extent of the black hole at the heart of European banking is not yet clear. Rigorous and compulsory stress tests are now required as a matter of urgency. Once we know the full extent of the problem, we can begin to act.

The banks must shoulder their responsibility. They must be forced to write down the cost of their bad debts as a prerequisite to any recapitalisation. The cost of recapitalisation should not be borne by ordinary taxpayers, particularly given the crippling levels of austerity being imposed on people across the EU.

This is an issue not only in respect of EU-wide debt. The same approach should also be applied by national Governments with regard to their own banking sectors. Sinn Féin has long argued for a significant write-down of banking debt imposed on the State by Fianna Fáil and maintained by this Fine Gael-Labour Government. The Greek Government has managed to secure significant private sector participation in its debt restructuring yet our Government has failed to secure the same. It is not credible for the Minister of Finance, on behalf of the Government, to claim that a similar deal cannot be secured for Ireland. The changes that have been achieved to date, which have led to some assistance to the Irish people, have been due to the crises in Greece, Portugal and Italy. Negotiating such a write-down, including the Anglo Irish Bank promissory note of over €74 billion, must be a priority for the Government in any talks on a long-term solution to the eurozone crisis.

Following a robust assessment of levels of debt and the debt write-down by banks, there is a need to begin the process of recapitalisation. An enlarged EFSF is not the vehicle for meeting the funding requirements of cleansed banks. Rather, the ECB must become the lender of last resort for the European banking system. The ECB is already performing this function in a number of countries, including in Ireland. Rather than printing euros to buy the bonds of European economies, the ECB would be better placed to redirect these facilities to stabilise the European banking system. These measures will only deal with the banking crisis. However, we need to promote economic growth and employment as complementary and concurrent to action taken to deliver jobs and economic growth.

The EU must once and for all abandon the orthodoxy of austerity. It is failing and leads only to hardship and recession. The banking crisis has led to a crisis of under investment. Each round of austerity further reduces investment in the domestic economy, forcing more people out of work. In the absence of private sector investment, we need the State to fill the investment vacuum. We need a Europe-wide stimulus programme to compliment stimulus programmes in individual member states. The European Investment Bank has twice the lending capacity of the World Bank. It must use that capacity with national Governments to increase the level of investment and create employment and build our infrastructure.

I have laid a path that must and should be followed at a national and European level. We have choices to make and we can continue as spectators to the farce that is enveloping the EU institutions. Regardless of our differences now, we share a common republican heritage, a republican heritage in which our leaders were told that no change was possible, that we were not in control of our destiny and that we should know our place. Yet history tells us that we always have choices to make and that these require leadership, determination and leading from the front. Wolfe Tone recognised it when he met with his comrades on Cave Hill in Belfast. The leaders of 1916 in Dublin knew that when they set out on Easter Sunday morning. Bobby Sands knew it as he lay alone in his hospital bed. The Taoiseach has highlighted what needs to be done in his speech to the Institute of Directors when he said: "We will regain our economic sovereignty. We will restore the good name of Ireland among the nations of the world. This is my mission. This is the Government's mission. This is our mission. And there will be no rest until we succeed." If we are to achieve this, we must begin to act. We must assert the interest of the Irish nation. We can put the brake on the idea that Europe is led by Germany and France. We can make it clear in the coming summit that we will not countenance further losses of sovereignty and that it is the will of the people of this sovereign State. It is not that of Germany, France, bankers or the President of the EU but the people and the Government must act on the will of the people. We will end the process of being spectators and will begin to assert our national interest. It is time that we began the process of shaping a Europe that serves the people and it is time for the Government to act and assert the will of the Irish people. Our sovereignty is not in the gift of others. We need to assert our sovereignty. I hope this Government will act but I travel more in hope than expectation.

Brian Stanley (Laois-Offaly, Sinn Fein)
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I thank the Taoiseach for attending the Chamber in advance of the EU Summit. It gives Deputies such as me the chance to address the issues that will arise. My colleague, Deputy Padraig Mac Lochlainn, has raised the issues relating to the financial crisis. However, the summit will also finalise the European Union's position for the Durban conference on climate change to be held on 28 November. There is an opportunity to shape the policy on an issue that has an impact on the global community and our nation.

Ireland is known throughout the world for its natural beauty and for the health and goodness of our natural produce yet, as a small island community, we are overly dependent on imported fossil fuels, which accounts for almost 90% of our fuel. This dependency undermines our environment and our economy. We are at the mercy of oil and gas producers and we have sold ourselves short on our rights in areas such as the Corrib basin. The energy costs for our people, our environment and our industry are unsustainable. An example is the recent 20% increase in domestic gas prices.

As a small nation, we have a wealth of potential sources of renewal energy in tidal and wind power. EU studies have demonstrated that we have more potential for these forms of sustainable energy than any other European country. We need to support and incentivise the use of such energy. Research has demonstrated that through wind power alone Ireland could become an exporter of sustainable energy to the rest of Europe. However we need to get the investment and infrastructure in place. This type of energy could be tapped and used for the benefit of our industry and our people.

These changes would have an impact not only on our economy but on our natural environment. I ask that the Government seeks to raise the EU's target on reducing CO2 emissions from 20% to a more ambitious 30%. Studies have shown that a 10% increase in the target would reduce Europe's oil and gas bill by over €40 billion per year, while simultaneously encouraging a much-needed uptake in green technologies. A legally binding 30% target would inevitably encourage the move to cleaner renewable energy and subsequently increase fuel security, which is very important. Given our natural assets, this move would benefit Ireland greatly.

Climatologists now agree that the existing commitments and pledges made under the Copenhagen Accord and formalised within the Cancun Agreements, are insufficient to meet the objective of limiting the overall global annual mean surface temperature increase to 2°C. It is clear that more needs to be done and action needs to be taken directly and quickly. The issue of climate change is a pressing issue for Ireland, for our people and our prosperity. An approach to reduce carbon emission would be good for the globe, good for all of us and good for our country. We are uniquely situated to lead on sustainable energy. I ask the Taoiseach to push the issue for a reduction of 30% in emissions at the EU Council meeting.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I propose to share time with Deputies Clare Daly and Shane Ross. Is it not time to admit that the routine of being the best boy in the European class is not working? The mounting evidence, whether in Greece, the latest figures on Irish bond yields, the downgrading of Irish growth forecasts or the growing awareness that the European economy will contract, means that this is not working. No matter how much the Taoiseach submits, promises to be the best boy and imposes austerity, it is not working.

Is the postponement of the European Council meeting not symbolic of what is going on in the EU? Chancellor Merkel and President Sarkozy postponed the meeting so they can hatch a plan that suits their interests. President Barroso, who is an unelected Commissioner, orders the Taoiseach to Brussels to tell him what they have decided.

Lucinda Creighton (Dublin South East, Fine Gael)
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The meeting was scheduled before they met. That is the Deputy's conspiracy theory out the window.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The European Council meeting will just be a rubber stamp for what they have decided, which is that they want the power to ram more austerity - more economic shock therapy - down our throats and those of other European states. It seems the only thing the Taoiseach and the Tánaiste are worried about is that the people of this country might have a say about that. They are not worried about the fact the European leaders want more power to ram austerity down the throats of workers, the vulnerable and the poor, they are not worried about the fact they are demanding the sale of our State assets, but they are desperately worried that there might be a referendum in which the people of this country would have some say, because they know that if there was the people would say "No".

Enda Kenny (Mayo, Fine Gael)
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That is rubbish. We want to use the decision the people made when they had their say already - to use the tools we have.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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The Taoiseach had his chance to speak.

This strategy is shameful and humiliating. It might be forgivable if the strategy of the EU, the ICB and the IMF was showing any sign at all of working, but it is not working. This week we saw all the evidence. The austerity in Greece is crucifying its economy. Its growth has collapsed and because of this, its unsustainable debt is even more unsustainable and unpayable. Because of this, the contagion will spread to France and across the rest of Europe. More bank bailouts will be required for the big European banks and therefore more austerity will be required as ordinary people in Europe are expected to pay for it. This will result in further contraction of the European economy, and the Government's hopes of an export-led recovery will disappear like snow off a rope. The markets are now saying that is what they think will happen. The Government's beloved markets are saying that Ireland cannot have the growth it hoped for because the European economy is going to contract due to the continued policy of austerity and bank bailouts.

There is a contrast to all this, as we have said over and over for the last few months, and that is what is happening in Greece. The Greek people have fought back and, as a result, the bondholders did get burnt, to the tune of 20%. They got what we did not get. It might be a 50% burning of the bondholders. Today, they got their €8 billion, even though they did not implement the austerity measures because of the Greek resistance.

Seán Barrett (Dún Laoghaire, Ceann Comhairle)
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The Deputy is eating into his colleagues' time.

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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We submit and impose shock therapy and we get nothing, while the Greeks, because they resist, get something. Is it not time to stand up and say "No" to this economic madness? We should do what the people in Greece and in Wall Street are doing, which is to protest and resist and demand a strategy that puts jobs and economic growth first.

Lucinda Creighton (Dublin South East, Fine Gael)
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So protest. There is nothing stopping the Deputy from protesting.

Enda Kenny (Mayo, Fine Gael)
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The Deputy is worried about his re-election.

Séamus Healy (Tipperary South, Workers and Unemployed Action Group)
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There are a number of things we know. The first is that there is now, if we did not know previously, a national and Europe-wide economic and social emergency. We know that the behaviour and treachery of the previous Fianna Fáil-Green Party Government has led to huge attacks on lower-income families and poor people generally in this State, and we know now that through the EU-IMF deal we have lost our sovereignty and, to a large extent, our independence. We know the current Government has embraced the deal negotiated by the previous Government and is imposing the same attacks and austerity on low and middle income families and the unemployed. We also know the policy of austerity has not worked and is not working, and that it is leading to major job losses throughout the country. In Clonmel, 125 jobs were lost yesterday, and our Army barracks and acute psychiatric unit are under threat. That is happening right around the country. Austerity is simply not working. If one goes down the high street of any town in the country one finds shop units vacant and more closing by the day. This is because people simply do not have money in their pockets. Something like €14 billion has been taken out of the pockets of ordinary people by the previous Government and by this Government, and the result is 450,000 unemployed.

Surely it is time we recognised the folly of what has been going on and introduced a stimulus to the economy. Surely it is time wealthy people in this country and throughout the EU paid their fair share, which they are not doing. There is no asset tax and no wealth tax in this country, despite their existence in many other EU countries and many states in the USA. The wealthiest 5% of people in this country have assets worth around €250 billion, and these must be taxed, because we cannot have a situation in which ordinary people are absolutely fleeced while those who are hugely wealthy get away scot free. That is the message for the European Council meeting on 23 October.

Clare Daly (Dublin North, Socialist Party)
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The developments over the weekend at the Franco-German summit have raised the possibility of changes to the treaty and a consequential referendum here. I would like to put on record my disappointment with the Taoiseach's comments over the weekend that such a referendum would not be welcomed. I can fully understand that it would not be welcomed from his perspective because if there was such a referendum there is absolutely no doubt it would be defeated. It would give a chance to the Irish people to voice their opinions on an agenda of selling off State assets and the prospect of cuts of a billion euro to social welfare, which was announced today.

Enda Kenny (Mayo, Fine Gael)
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That was not announced today. There was conjecture in the newspapers about it. Where was the announcement made?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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He did not deny it.

Micheál Martin (Cork South Central, Fianna Fail)
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It was well leaked.

Clare Daly (Dublin North, Socialist Party)
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Let the jury pass judgment on that when it happens.

Enda Kenny (Mayo, Fine Gael)
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Where was the announcement made?

Clare Daly (Dublin North, Socialist Party)
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The prospect is out there. We will wait and see.

Micheál Martin (Cork South Central, Fianna Fail)
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The Irish Times.

Clare Daly (Dublin North, Socialist Party)
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We will wait and see whether it materialises.

Enda Kenny (Mayo, Fine Gael)
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Excuse me, Deputy. When was the announcement made?

Clare Daly (Dublin North, Socialist Party)
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Is the Taoiseach saying this will not happen?

Micheál Martin (Cork South Central, Fianna Fail)
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Really.

Enda Kenny (Mayo, Fine Gael)
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Where was the announcement made?

Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is it not going to happen?

Clare Daly (Dublin North, Socialist Party)
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It is not going to happen. If the Taoiseach is denying the newspaper reports, I am delighted.

Enda Kenny (Mayo, Fine Gael)
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On a matter of clarification-----

Clare Daly (Dublin North, Socialist Party)
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Can I make my comments?

Enda Kenny (Mayo, Fine Gael)
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The Deputy said an announcement was made today.

Micheál Martin (Cork South Central, Fianna Fail)
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The Taoiseach knows how it works.

Clare Daly (Dublin North, Socialist Party)
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Yes. It appeared in the national newspapers-----

Peter Mathews (Dublin South, Fine Gael)
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Who knows where announcements may be?

Enda Kenny (Mayo, Fine Gael)
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Where was the announcement made?

Charlie McConalogue (Donegal North East, Fianna Fail)
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Can we have some order, please?

Clare Daly (Dublin North, Socialist Party)
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It appeared in today's national newspapers. If the Taoiseach is denying it, I am delighted.

Enda Kenny (Mayo, Fine Gael)
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The Deputy is always very clear in her comments. Where was the announcement made?

Clare Daly (Dublin North, Socialist Party)
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The Irish Times.

Charlie McConalogue (Donegal North East, Fianna Fail)
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Can we have some order, please? The Deputy has the floor.

Clare Daly (Dublin North, Socialist Party)
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I thank the Acting Chairman.

Enda Kenny (Mayo, Fine Gael)
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I thank the Deputy for her clarity.

Clare Daly (Dublin North, Socialist Party)
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I like the Taoiseach's diversionary tactics, but the reality is-----

Enda Kenny (Mayo, Fine Gael)
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It was the Deputy who mentioned it.

Clare Daly (Dublin North, Socialist Party)
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-----that people in this country are entitled to a referendum should changes be proposed to the treaty.

I also note the Taoiseach said he would not like to see a two-tier Europe. It is a bit late for that. He may aspire to sit there as an equal, and his chair might be the same size, but he is definitely not a member of the top table. The real divide in the eurozone is not between the big countries and the small countries, although that exists, but between the big transnational business interests and the ordinary people, no matter where they are, who are paying the price through austerity. What we really have here is a crisis of the economic system and a crisis of neoliberalism.

In July, the Taoiseach and the other eurozone leaders told us they had a package that would stabilise the Greek debt crisis and avert a default. Now the Council meeting has been delayed because the troika report is not ready; they have not decided what verdict will come from their visit. Incidentally, it is an important lesson for Irish people to consider what has been foisted on the Greek population through the additional austerity measures: a property tax, more public sector job losses on top of the plan to sack around 150,000 civil servants, draconian wage cuts and so on. These policies can only result in economic and social catastrophe. The Greek economy is contracting. The question the Taoiseach needs to ask is when will the lunacy stop. Austerity is not working in Greece. How will it yield different results in Portugal, Ireland or indeed Belgium, where the newspaper headlines this morning are about the Dexia bank crisis?

The only solution the eurozone leaders are putting forward is more of the same. The six-pack measures are an anti-democratic attempt to ram through, over citizens' heads, more vicious austerity. As other speakers observed, this approach ignores the reality that Greek debt is unsustainable and a default inevitable. Strategists close to the investment banks and other financial interests are clear on that point. The solution is not a recapitalisation which protects bondholders and speculators but rather genuine, democratic accountability and public ownership of the banks which gives citizens a proper say in how resources are invested. They must be invested in people, not profits and speculation.

Shane Ross (Dublin South, Independent)
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I find myself largely in agreement with my Independent colleagues on this issue. I do not know whether the Taoiseach noticed the headline in The Irish Times yesterday, "Kenny called to talks with Barroso over euro zone crisis". We are suffering a type of national humiliation in terms of what is happening between us and Europe. The Taoiseach should not be called to any talks by a civil servant in Brussels. The sub-editor who devised this headline in The Irish Times was clearly indicating his subliminal perception that we are the servants and Barroso the dominant force in the relationship. That perception is accurate. What has happened in recent months is that Ireland, because of our economic dependence on Europe, is dancing to the Sarkozy-Merkel tune. We are dancing to the tune of the Commission; we are dancing to the tune of Merkel and Sarkozy; and we are dancing, unfortunately, to their political agenda.

The reality of what is happening in Europe is not so much economic as political. The agenda is being set by the French elections in May next year and the German elections in 2013. An effort is being made by both the German Chancellor and the French President to delay matters to the extent that they do not have to make any decisions which might be electorally damaging for them. Ireland is playing to that particular agenda and hoping to piggyback on the situation. One need only consider what happened this morning in Dublin - if it has not yet happened, it will do so in a few minutes. When Deputy Clare Daly talks about big business and big government aligning with the large powers in Europe, she is absolutely correct. Ireland is, unfortunately, playing its part in that.

The Irish Banking Federation is hosting its annual conference today at which a speech will be delivered - via video link, because he is unable to attend in person - by the European Commissioner for Economic and Monetary Affairs, Mr. Olli Rehn. This tells us that big government, big banks and big business are aligning behind a similar agenda. I will be interested to hear the message from Mr. Rehn to the banks. My guess is they will pat each other on the backs, as they always have done and always will do. As Deputies Clare Daly and Richard Boyd Barrett observed, citizens are being forgotten in the agenda which is going forward. There is a political agenda which means that those who are in power, in positions of strength and status, will remain there. There is an electoral agenda to preserve Sarkozy and Merkel. Finally, there is a big business and big bank agenda to save the large banks.

The idea of a referendum is pooh-poohed by everybody on the other side of the House. The great strength of a referendum is not that it would necessarily be binding on the Government but that the Government would be able to go to the high tables of Europe with a mandate in that regard. The Government should not be frightened of a referendum. Rather, it should seize the opportunity it presents.

Lucinda Creighton (Dublin South East, Fine Gael)
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I thank Members for their contributions to this important debate. I represented the Government at yesterday's meeting of the General Affairs Council in Luxembourg. It is the responsibility of the Council to prepare the work of each European Council meeting and it was agreed yesterday that we would meet again next Saturday, in advance of the rescheduled European Council meeting on 23 October. We heard from the President of the European Council, Mr. Herman Van Rompuy, about his plans for that meeting. He was interested to get a sense from Ministers of their reactions to the shape which the draft conclusions for the European Council are developing. There was a broadly shared view that the draft conclusions struck a correct balance across the range of issues. These were set out by the Taoiseach earlier and include a most welcome focus on jobs and growth. It has been repeatedly said in this House that there must be a balance in terms of moving away from a constant focus on austerity to a greater consideration of stimulus measures and growth prospects. That will be a key focus for the European Council meeting.

Mr. Van Rompuy also briefed Ministers on his ongoing work to develop concrete proposals on how to improve working methods and enhance management in the euro area. He and his team have conducted an extensive round of bilateral consultations with all member states and other interested partners, including the European Commission. As the Taoiseach noted, Mr. Van Rompuy's proposals in this regard are awaited. The time leading up to the European Council meeting later this month will be put to good use in allowing Mr. Van Rompuy and his team to ascertain the fullest possible picture of the needs facing the euro area, which will inform his proposals. The Government, like all member state Governments, will feed into that process. We will avail of the opportunity to put forward our position at the eurozone and ECOFIN meetings that will take place towards the end of next week and at the General Affairs Council meeting on Saturday.

The draft conclusions also highlight the critical importance of the external aspects of Europe's economic policy in terms of boosting our growth potential into the future. There are concrete actions the EU can and should take, such as focusing on bilateral and regional trade agreements, as well as the overall prize of concluding the WTO Doha round of trade talks and developing the EU's economic ties of trade and investment with those countries in our own neighbourhood. The Taoiseach outlined these issues in detail earlier. Given the ongoing difficulties with the Doha round, there is a strong awareness of the need to focus on these regional and bilateral arrangements and to intensify efforts in that regard.

As well as addressing preparations for the European Council meeting on economic policy issues, the General Affairs Council also addressed itself at yesterday's meeting to the preparation of an agreed EU position for the G20 summit which France will host in Cannes at the beginning of November. This puts forward an important and credible deadline for the European Council to come forward with a much more substantive response to the current crisis in the eurozone. It is a natural deadline.

I have limited time in which to respond to Members' points. Deputy Michéal Martin urged that the Government, particularly the Taoiseach, engage in more bilateral initiatives. I assure him that work is ongoing. It is not true to say the Taoiseach has not had bilateral meetings with other Heads of Government other than on the fringes of European Council meetings. For example, he has had bilateral meetings with the Hungarian Prime Minister, Mr. Orbán, and the Polish Prime Minister, Mr. Tusk, in Dublin.

Micheál Martin (Cork South Central, Fianna Fail)
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What eurozone Ministers has he met?

Lucinda Creighton (Dublin South East, Fine Gael)
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He has had bilateral meetings in recent weeks with six eurozone leaders and will travel to Berlin and Paris in November. That work is ongoing. All Ministers and Ministers of State have been engaged in intensive bilateral work.

Micheál Martin (Cork South Central, Fianna Fail)
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They have not.

Lucinda Creighton (Dublin South East, Fine Gael)
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Yes, they have. Several Ministers, including myself, have travelled to Paris and Berlin on numerous occasions.

Micheál Martin (Cork South Central, Fianna Fail)
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How many eurozone Finance Ministers has the Taoiseach met in the last eight months?

Lucinda Creighton (Dublin South East, Fine Gael)
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The Minister for Finance has engaged in numerous bilateral meetings, as has the Minister for Jobs, Enterprise and Innovation. The Deputy is incorrect in his claims.

Micheál Martin (Cork South Central, Fianna Fail)
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What I have said is factually correct.

Lucinda Creighton (Dublin South East, Fine Gael)
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Deputy Pádraig Mac Lochlainn makes a fair point regarding EU banking stress tests. The more comprehensive stress testing of Irish banks has stood up to scrutiny far better than the EU-wide stress tests. No doubt the Minister for Finance, Deputy Michael Noonan, will have something to say about that as time goes on.

Charlie McConalogue (Donegal North East, Fianna Fail)
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The Minister of State's time is up.

Lucinda Creighton (Dublin South East, Fine Gael)
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I ask for the Acting Chairman's indulgence. Some of the other contributions ran over time-----

Micheál Martin (Cork South Central, Fianna Fail)
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They did not.

Lucinda Creighton (Dublin South East, Fine Gael)
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-----and I very much wish to make a final point. Deputy Richard Boyd Barrett said that being the best boy in the class is not serving Ireland's interest and that we should instead behave like the Greeks, for which we will receive our reward. The Deputy voted against the European Financial Stability Facility, EFSF, Bill which has assured that we have a significantly reduced interest on our debt repayments.

Charlie McConalogue (Donegal North East, Fianna Fail)
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Minister, the other Deputies kept to the time limit.

Lucinda Creighton (Dublin South East, Fine Gael)
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The General Affairs Council yesterday approved the European Financial Stability Mechanism which will result in a saving of approximately €6 billion for this country in the very near future. To say that-----

Charlie McConalogue (Donegal North East, Fianna Fail)
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Minister, you are now nearly-----

Lucinda Creighton (Dublin South East, Fine Gael)
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-----significant progress has not been made is untrue. I would have wished to respond to many other points but we might have an opportunity to do that after the European Council meeting at the end of next week.